Report: Mobile Entertainment Market Below Expectations

Despite 20% revenue growth for entertainment content delivered via mobile cell phones in 2007, mobile operators and digital commerce (financial) services continue to be disappointed, according to a new report.

Entertainment, which includes ringtones and video, generated $3.4 billion in revenue out of the $18.5 billion global premium content mobile market.

Multi-Media Intelligence, a Scottsdale, Ariz.-based research firm, said mobile operators remain frustrated by their spot on the entertainment food chain.

The report said with the demand for ringtones softening, movie studios steadfastly maintain differing release windows that result in a trickle down of content to the mobile industry. That, they say, has resulted in an indifferent consumer.

“Many industries would be thrilled with 20% growth,” said Frank Dickson, chief research officer with Multi-Media. “[But] the mobile content platform finds it disappointing.”

Franks said the mobile industry is stuck in a content ecosystem between more powerful operators (telecommunications, cable and TV) and content owners (studios).

He said system operators continue to control subscribers while studios control the content, which results in disparate revenue streams.

“Revenue distribution among the different industry segments reflects this power imbalance,” Dickson said.

The report said there will be an increase in ad-supported video and other premium content. In addition, the North American market will be dominated by so-called off-deck digital content, such as video or audio, purchased from a third-party provider but delivered over a service provider's network.

The report said ease-of-use issues with consumers and unscrupulous content offerings by some off-deck providers led to a crackdown by carriers such as Sprint Nextel seeking to enact stricter guidelines and penalties.

Verizon, for example, has upped direct-to-bill charges for content in an effort to compete against off-deck providers.

Regardless, Informa Telecoms & Media reportedly projected that 70% of content revenue would come from off-deck platforms within the next five years.